Gold going from strength to strength

Gold going from strength to strength

Gold has had an excellent week, breaching US$2,070/oz in Friday's trading in the US. This vindicated our comments over a number of months where we advised that gold stocks will be coming back into focus. Silver is similarly attracting attention.

There is a general acceptance in the market that US interest rates have peaked, so the market is preparing for the next phase of reducing interest rates. Even though this is more of a medium term expectation the market is factoring it in now. So, the US dollar is softer and commodities priced in US dollars are rising. As mentioned above, gold has been a great performer.

Those who hold gold producers will be pleased but how many investors have good exposure to the sector? Risk preferring investors looking for greater leverage will go for pre-development stocks that still have a strong exploration component to their projects, be it brownfields or virginal. These offer the best opportunity for re-rating in the event of material exploration success.

This week we take a closer look at recent discoveries of gold deposits that could lead to a new generation of high-grade Australian underground gold mines.